Tax fairness more than about cuts

Express-News Editorial Board

Published
12:00 am CDT, Sunday, April 24, 2016

Texas lawmakers will be facing difficult budget issues when they return to Austin next year. A drop in oil prices has delivered a blow to state revenues and rapid growth continues to increase the demand for services. Legislators should take a good look at the whole tax structure. less

Texas lawmakers will be facing difficult budget issues when they return to Austin next year. A drop in oil prices has delivered a blow to state revenues and rapid growth continues to increase the demand for ... more

Photo: Courtesy Ford, Powell & Carson /Courtesy Photo

Photo: Courtesy Ford, Powell & Carson /Courtesy Photo

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Texas lawmakers will be facing difficult budget issues when they return to Austin next year. A drop in oil prices has delivered a blow to state revenues and rapid growth continues to increase the demand for services. Legislators should take a good look at the whole tax structure. less

Texas lawmakers will be facing difficult budget issues when they return to Austin next year. A drop in oil prices has delivered a blow to state revenues and rapid growth continues to increase the demand for ... more

Photo: Courtesy Ford, Powell & Carson /Courtesy Photo

Tax fairness more than about cuts

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The state comptroller in October lowered the state’s revenue estimate by $4.6 billion. When the last legislative session ended last year, oil was $60 a barrel. Now, it’s about $37. This has meant not just dips in the state tax take but spikes in joblessness in the energy and manufacturing sectors.

Meanwhile, the state’s largest revenue generator, the sales tax, has had five months of declines, and big bills could come due from tax lawsuits and fixing foster care and public school funding.

What’s this spell? Certainly not a focus on tax relief in this next legislative session. Yet that is what top legislative leaders have in mind. The Legislature cut $3.8 billion in property and business taxes last session.

Tax fairness means more than just cutting taxes.

Texas Speaker Joe Straus, in a letter to House Budget Chairman John Otto, outlines these budget bumps ahead and urges a disciplined two-year budget. He said the House shouldn’t “abandon the commitment to low taxation and overall fiscal discipline.”

We agree — emphasis, however, on fiscal discipline. This dictates that the state take a broader view than just cutting taxes.

Zero-based budgeting in which all spending is justified? Certainly. But this can’t mean ignoring those commitments. Fiscal discipline and needs that grow as fast as Texas’ population dictate finding new revenue sources. Texas gained 345 new residents per day between 2005 and 2013.

Yes, even a state income tax should be on the table. State reserves — a rainy day fund ($10 billion) and a hefty balance in the last two-year budget ($4 billion) — can’t do all the heavy lifting. A public school fix alone could run up to $11 billion.

Here’s how the Center for Public Policy Prioritiesoutlined the fairness problem last year: “In Texas, the households with the lowest incomes pay the highest percentage of their income in taxes; the households with the highest incomes pay the lowest percentage of their income in taxes. In other words, those who can least afford it pay the most.”

Here’s how the state sales tax, which provides more than half of state revenues, figures in: Low-income families spend three-quarters of their income on taxed goods, middle-class families half their incomes, but the wealthiest families one-quarter or less.

Yes, Texas property owners are burdened with relatively high property taxes. But, remember, this is passed on to renters as well.

Needed in the next session: a look at the entire state tax code, with an emphasis on both fairness and the state’s ability to meet its commitments.